Corbett opens door to drilling fees

Governor might consider a local fee that helps residents deal with gas drilling.

March 24, 2011|By John L. Micek, CALL HARRISBURG BUREAU

HARRISBURG — — Gov. Tom Corbett has sent his clearest signal yet he might consider a locally levied impact fee on natural gas drillers working in the Marcellus Shale zone.

"The communities have to be taken care of, I understand that," Corbett told reporters at a news conference on Wednesday.

Senate President Pro Tempore Joe Scarnati, R-Jefferson, whose district is in the shale belt, has floated the idea of a fee to help counties offset the public infrastructure costs of drilling.

Corbett, who has vowed not to raise any taxes or fees to close a $4.1 billion budget deficit, said he'd have to thoroughly review any proposal before he'd sign it.

He also adamantly opposes a so-called "severance tax" on shale drillers, arguing it would chase drillers to states where it's cheaper to do business. Pennsylvania is the only major gas-producing state that does not impose a tax.

The Republican governor said he "[understands] that this is important to the local communities," but established criteria. Such a fee can't be called a tax, he told the reporters, and the proceeds must go to local governments and not the state's general fund budget.

If those parameters are met, Corbett said, "I'd sit down and look at it." In the same breath, he added, "It's so speculative [a question], I can't really answer it."

In a follow-up question, Corbett told one reporter he didn't want people to "confuse an impact fee with a tax."

Corbett said he expects the issue to be discussed by a Marcellus Shale Commission chaired by Lt. Gov. Jim Cawley. The panel holds its first meeting Friday in Harrisburg.

Last year, the state House and Senate each passed its own version of a severance tax. But the two sides ran out the clock before they could reconcile their differences.

Scarnati's chief of staff, Drew Crompton, said work is under way on an impact fee bill that could be introduced in coming weeks. Before that happens, Crompton said, staffers are trying to work out the difference between "fee" and a "tax."

Crompton said he believes the distinction is about more than semantics. "We just don't want to take our bill from last year and cross out 'tax' and replace it with 'fee,' " he said.

Republicans who control the state House oppose any new taxes or fees on gas drillers, echoing Corbett's argument about their potentially harmful effects on the multibillion-dollar natural gas industry.

Democrats, however, have been roundly critical of the administration's failure to include a severance tax in the $27.3 billion budget plan it introduced earlier this month. With broad swaths of state government, including public schools and higher education, facing cuts, they argue that drillers should be made to pay their share.

Both Sides Now

For a levy on drillers:

Other states impose a "severance tax."

Fee would provide money to offset local issues, like trucks damaging roadways.